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Know Your Marital Rights, Part 2

The first part of this article looked at how getting married can give you and your spouse a lot of financial benefits. However, marriage also changes the way in which many financial and estate planning issues are handled, especially when couples fail to plan carefully before something unexpected happens. Careful attention to these issues is required in order to make sure that everything works the way that you and your spouse want.

Marriage and automatic estate planningOne general rule for estate planning is that if a major event occurs in your life, you should review your estate planning documents to make sure that they still do what you want them to. Marriage is an excellent example of such a major event. Before you're married, you may be more inclined to leave assets to your parents or siblings in the event of your death. Getting married, however, usually shifts your priorities toward caring for the financial needs of your spouse.

Most governments' public policy supports the idea that laws should give great import to the act of marriage. For example, in many states, if you are married but don't have a will or other estate planning documents, your spouse automatically inherits your entire estate if you don't have any children. Even states that don't give the spouse everything still usually leave a substantial amount of estate assets to the surviving spouse. In most cases, it doesn't matter whether you've been married 30 years or 30 minutes; the same rules apply.

Even if you already have a will in place before you get married, many states have laws that effectively write your spouse into your will after marriage. Known as pretermitted spouse statutes, these laws make the assumption that if a will you wrote before you got married doesn't include your spouse, then you must have neglected to update it after you got married to include spousal provisions. Some states then give your spouse an amount equal to whatever they would have gotten if you hadn't had a will at all, which can result in your spouse getting most or all of your assets, leaving the people named in your will with whatever amount remains.

Lastly, many states won't allow you to disinherit your spouse, regardless of the circumstances under which you wish to do so. Even if you write a will after getting married that specifically states that you intend to leave nothing to your spouse, many states have laws known as elective share statutes, which give your spouse the unconditional right to demand a share of your estate. While these laws usually don't give your spouse as large a fraction of your estate as he or she would receive if you hadn't written a will at all, they can result in your spouse receiving as much as half of your estate over your most strenuous objections.

Of course, for most people, these laws do exactly what they would want to support their spouse. On the other hand, if your situation differs from the more typical case, it's important to understand the potential difficulties that these laws present. For example, spouses who have children from outside their current marriage may need to take special steps if they want to guarantee that a certain portion of their assets will go to those children. The best solution is to work closely with an estate planning attorney who is familiar with these issues in order to ensure that your wishes are respected no matter what happens.

Managing your propertyIf you intend to manage your assets jointly with your spouse, you may want to ensure that you both have joint control over all of your financial accounts. In most cases, this just requires that you take the time to change your financial accounts to include both spouses on the account titles. Depending on where you live, you may have several options available to you that have slightly different characteristics. For instance, some joint accounts allow either you or your spouse to take unilateral action with respect to the account assets, while others require both spouses to approve a transaction. Also, you may be able to avoid certain complications and expenses related to probate by granting your spouse survivorship rights on financial accounts.

On the other hand, if you need to keep some or all of your assets separate from those of your spouse, then you should probably get legal counsel from an attorney, ideally before you marry. In many cases, even if only your name appears on a certain account, your spouse may exercise certain rights over that property in the event of death or divorce. For complicated financial situations, a prenuptial agreement is often the best way to specify exactly what each spouse wants to happen if certain circumstances arise.

Financial planning may not be the most enjoyable part of marriage, but it is an essential component of making a marriage successful. As long as you're aware of the potential issues that you'll face as a married couple, you can manage them effectively while taking advantage of the financial benefits that married couples receive. Regardless of the particulars of your relationship with your spouse, you have the ability to create and maintain a strong financial foundation for your marriage.

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Fool contributor Dan Caplinger loves his wife for putting up with his financial nitpicking. He doesn't own shares of the companies mentioned in the first part of this article. The Fool's disclosure policy is a great relationship builder.

Author

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.
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